Microsoft dramatically cut back investments in carbon removals in the first half of the year, as it ratchets up spending on artificial intelligence.\u00a0<\/p>\n
The company bought 8.55 million metric tons of carbon removal credits in the year through mid-July, which is about 80% less than it purchased over the same period in 2025, according to calculations by BloombergNEF. That puts Microsoft on track for its first retreat since 2023 from a market it entered in 2020.<\/p>\n
At the same time, Microsoft\u2019s carbon footprint has been growing. AI\u2019s seemingly insatiable demand for electricity, coupled with the slow rollout of cleaner solutions, resulted in a 25% increase in the company\u2019s emissions last year, according to its latest sustainability report.\u00a0<\/p>\n
The development comes as Microsoft and other hyperscalers are locked in an AI arms race in which efforts to achieve scale appear to be on a collision course with previously stated climate goals. Bloomberg News reported in April that Microsoft was pausing some of its carbon removal purchases due to financial considerations. The company said back then the program hadn\u2019t ended.\u00a0<\/p>\n
In an emailed response to Bloomberg News, Microsoft said that buying removal credits is only one pillar of its pathway toward decarbonization. \u201cAny adjustments we make are part of our disciplined approach, not a change in ambition,\u201d a spokesperson for the company said.<\/p>\n
Despite this year\u2019s retreat, Microsoft remains the top buyer by far in the voluntary carbon removal market, accounting for almost half of all transactions so far in 2026.\u00a0<\/p>\n
Given Microsoft\u2019s outsized role, any shift in its commitment has a significant impact on the market. Global sales of carbon removal credits totaled 18 million metric tons through mid-July, tracking 66% below 2025 levels, according to BNEF data.\u00a0<\/p>\n
\u201cAside from the sheer size of its purchase, Microsoft\u2019s activity has also sent a key signal to its peers that carbon removals are a worthwhile investment,\u201d said Layla Khanfar, a BNEF analyst tracking the market. \u201cIf it pulls back, that also sends a message and other companies could be disinclined to take its spot as a champion.\u201d\u00a0<\/p>\n
United Nations-backed scientists warn that cutting emissions alone will not prevent global warming\u2019s worst effects. Billions of tons of atmospheric CO2 must also be removed annually by midcentury. Certain carbon removal technologies such as direct air capture remain prohibitively expensive to deploy at scale, leaving the nascent sector reliant on voluntary corporate buyers to bankroll development.<\/p>\n
While Microsoft tempers its pace, other buyers are stepping up. Frontier \u2014 a coalition that includes Stripe Inc., Anthropic PBC and Alphabet Inc. \u2014 for instance, in June committed $915 million to support carbon removal projects.<\/p>\n
\u201cPeople need to look beyond just Microsoft\u2019s activity when forming an opinion on the market,\u201d said Lee Bostock, founding partner at Vuelta Carbon, a carbon markets trading and advisory firm. \u201cI do believe that the market is evolving in a positive and encouraging manner, but sellers and buyers need to be realistic about the stage that market is in.\u201d\u00a0<\/p>\n
Since 2020, Microsoft has purchased 41% of carbon dioxide removals globally, BNEF data shows.\u00a0<\/p>\n
Microsoft Philanthropies underwrites some Seattle Times journalism projects.<\/p>\n